Nippon Chemi-con CorporationTSE: 6997

Financial Results Explanatory Material (2Q FY2024)

· Issued by Nippon Chemi-con Corporation

Financial Results Explanatory Material

for 2Q FY2024

(Six months ended September 30, 2024)

TSE Prime Market, Securities code: 6997

NIPPON CHEMI‐CON CORPORATION

November 2024

0

Trends in Quarterly Earnings

Net Sales

Operating

Unit: Million yen

Trends in Net Sales and Operating Margin

Margin (％)

50,000

15%

9th Medium-term Management Plan

10th Medium-term Management Plan

45,000

42,858 41,982 41,137

13%

40,000

37,825 38,439

38,602

39,203

11%

35,680

35,989

34,718

35,000

9.7%

9.4%

33,383

33,118

9%

30,931

30,618

29,296

30,000

28,405

27,670

6.9%

7%

7.2%

6.4%

7.2%

6.4%

6.2%

5.9%

5.8%

25,000

23,781

5.1%

5%

5.1%

5.4%

4.3%

4.3%

20,000

3%

15,000

1.8%

1.8%

1%

10,000

-1.3%

-1%

5,000

-3%

0

-5%

FY2020

FY2021

FY2022

FY2023

FY2024

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

NIPPON CHEMI‐CON CORPORATION

November 2024

1

2Q FY2024 Consolidated Earnings Summary

Revenues declined amid sluggish demand on markets other than the ICT market.

Profit decreased on decline in gross margin and utilization

Rate of Change

Unit: Million yen

1H/FY2023 Results

1H/FY2024 Results

Change

(%)

Net Sales

80,341

59,914

-20,426

-25.4%

Operating income

5,123

1,850

-3,273

-63.9%

Operating margin

6.4%

3.1%

-3,3pt

-

Net income

-22,781

78

+22,859

-

ROA

-14.0%

0.0%

+14.0pt

-

ROE

-56.5%

0.1%

+56.6pt

-

Capital investment

5,332

5,218

-114

-2.1%

Depreciation and

3,095

3,285

+189

+6.1%

amortization

R&D expenses

2,259

2,056

-203

-9.0%

Currency rate

141.00

152.63

Yen depreciation: 8.2％

vs USD (yen)

vs. EUR (yen)

153.39

165.95

Yen depreciation: 8.2％

NIPPON CHEMI‐CON CORPORATION

November 2024

2

2Q FY2024 Consolidated Earnings Highlights

Net Sales

¥59.9 bn

YoY -25.4％

Operating income

¥1.8 bn

YoY -63.9％

Profit/loss attributable

to owners of parent

¥80 mn

1H Main Points

- Net sales

ICT market orders received were favorable thanks mainly to servers as performance exceeded initial forecasts. However, the recovery of the industrial equipment market was delayed by economic downturn in China, among other factors. Also, net sales from the automotive electronics market fell below initial forecasts due to transitional inventory adjustments

- Operating income

With the decline in net sales, net production also decreased. This caused utilization losses that resulted in a decline in gross margin ratio

We benefited from yen depreciation and worked to constrain fixed costs but operating income fell below initial forecasts

NIPPON CHEMI‐CON CORPORATION

November 2024

3

2Q FY2024 Net Sales by Market and by Region

  • Percentage of Net Sales by Market

1H FY2023

Results

1H FY2024

Results

Automotive electronics

Industrial Equipment

New

Home

ICT

Other

Energy

appliances

32%

22%

23%

7%

7%

9%

37%

19%

4%

7%

26%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

  • Percentage of Net Sales by Region

1H FY2023

Results

1H FY2024

Results

Greater China

Japan

Europe

Americas

Other

35%

20%

16%

13%

16%

38%

22%

12%

12%

16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

NIPPON CHEMI‐CON CORPORATION

November 2024

4

2Q FY2024: Operating Income YoY

Unit: Billion yen

14.0

Income decreased on lower sales due to sluggish recovery in demand on industrial equipment market and other markets

12.0

10.0

8.0

6.0 5.1

4.0

2.0

0.0

1.6

1.7

1.1

1.0 0.6 0.5

-8.5 -1.9 -1.2

NIPPON CHEMI‐CON CORPORATION

November 2024

5

FY2024 Full-Year Consolidated Earnings Forecast

Forecasting decreased net sales and income on inability to achieve sales targets due to

sluggish recovery on industrial equipment market and stagnant automotive electronics market

FY2023

YoY

Unit: Million yen

FY2023

FY2023

FY2024

FY2024

FY2024

Full-year

Full-year Earnings

Rate of Change

1H Results

2H Results

1H Results

2H Forecast

Results

Forecast

(%)

Net Sales

80,341

70,398

150,740

59,914

73,086

133,000

-11.8%

Operating income

5,123

4,298

9,422

1,850

5,349

7,200

-23.6%

Operating margin

6.4%

6.1%

6.3%

3.1%

7.3%

5.4%

-

Net income

-22,781

1,490

-21,291

78

3,921

4,000

-

ROA

-14.0%

-

-12.7%

0.0%

-

2.4%

-

ROE

-56.5%

-

-41.2%

0.1%

-

7.1%

-

Capital investment

5,332

5,862

11,195

5,218

3,282

8,500

-24.1%

Depreciation and

3,095

3,243

6,339

3,285

3,115

6,400

+1.0%

amortization

R&D expenses

2,259

2,229

4,489

2,056

2,144

4,200

-6.5%

Currency rate

141.00

148.25

144.62

152.63

145.00

148.82

Yen depreciation:

vs USD (yen)

2.9％

vs. EUR (yen)

153.39

160.21

156.80

165.95

160.00

162.97

Yen depreciation:

3.9％

NIPPON CHEMI‐CON CORPORATION

November 2024

6

2H FY2024 Consolidated Earnings Forecast: Main Points

Net Sales

¥73.0 bn

vs. 1H +22.0％

Operating income

¥5.3 bn

vs. 1H +189.2％

Profit/loss attributable

to owners of parent

¥3.9 bn

2H Main Points

  • Net sales
    • The automotive electronics market saw transitional inventory adjustments but hybrid capacitor demand was firm and we will continue with full-scale production during 2H
    • The industrial equipment market is expected to see inventory adjustments subside towards the end of 3Q so we are forecasting demand recovery from 4Q
    • The ICT market saw favorable demand with servers for data centers in North America from 1Q, and we forecast further growth in 3Q and beyond
  • Operating income
    • With increased net sales, net production will also increase, which will improve utilization gains.
      We forecast that the product mix will improve with growth in hybrid capacitors and other products, which will further improve gross margin and lead to a significant increase in income

NIPPON CHEMI‐CON CORPORATION

November 2024

7

Outlook for Current Operating Environment and Three Major Markets

Automotive Industrial equipment electronics New energy

ICT

1H FY2024 2H FY2024 1H FY2025

Market Outlook

  • While there is concern about a slowdown in the EV shift in the West,

the adoption of automotive electronics such as advanced driver assistance systems (ADAS) is advancing steadily, and the number of components per vehicle is trending upward

  • FY2024 global production volume projected to improve from 2H
  • Inventory adjustment is requiring more time than expected, causing

a delay in market recovery in China and Europe

✓ Looking at current orders received, we are beginning to see orders in anticipation of a recovery in FY2025

  • Orders received recovering thanks to servers in North America,

particularly orders for AI servers

(demand for high-capacitance capacitors is trending upwards due to increasing power consumption)

  • Demand for mobile base station products is increasing in India and other emerging nations

NIPPON CHEMI‐CON CORPORATION

November 2024

8

2H FY2024 Forecast Operating Income (vs. 1H)

Projecting increased sales and income on increased server demand in

the ICT market and recovery in the industrial equipment market

Unit: Billion yen

10.0

0.6

6.7

9.0

8.0

-1.1

7.0

-0.9

5.4

6.0

-0.7

-0.7

-0.1

5.0

-0.3

4.0

3.0 1.9

2.0

1.0

0.0

NIPPON CHEMI‐CON CORPORATION

November 2024

9